Hi,
I'm about to put an offer on a property that I intend to subdivide into 18-21 lots. I have contacted a few town planning consultants and 'development consultants'. The difference with the latter is that the firm will help perform the financial feasibility in addition to the town planning feasibility, as well as project manage the overall process.
My questions
1) What level of assessment is normally performed during due diligence? Do developers engage a town planner to perform a brief site assessment, or do they engage the whole crew (town planners/surveyors, engineers, traffic/ecological studies)? I was shocked when the development consultants said that the due diligence period is expected to be 4 months (inclusive of ecology, hydraulics, traffic engineers). The town planners said that a 2 week due diligence is sufficient to perform an initial site assessment. But will this be too brief…? What could the unforeseen issues be (e.g. traffic/noise issues, something beneath the ground?)?
2) Has anyone used a development consultant for their project? Any opinions on them? Any recommended ones? I'm currently looking at http://www.developersedge.com.au
This will be my first development project…..I know it's a bit big for a first one but my mantra has always been accelerated learning. My plan is to use a development consultant so I can accelerate my learning by following the 'expert'. I don't plan to start the actual work until the economic climate stabilises.
Regards,
AlbertAlbert
Wont comment on the DD question but have you made sure you can finance something of this size.
Richard Taylor | Australia's leading private lender
Hi Richard,
That's one of the aspect that I'm currently working on, until the end of the DD period – where I'll be getting inputs on development costs(council/contributions and townplanners/surveyor/engineers fees), development finance (waiting on my current broker to reply on this), sales, etc.
I have heard that banks can finance up to 70% of end value. Is this true – if so, I suppose they require pre-sales, development experience, etc? My worst case scenario is to tap into our (my brother and myself) equity (a bit more than $500k) for the development cost and if need be, into our own cash reserve. Even then I'm not sure if that'll be enough….
Interested to hear your inputs.
On another note, thanks for your recommendation on Steve H. I like the way he explains things and he's on the ball with email responses so far. He's helping me with structuring a trust for this development. I think it must've been nearly 2 years since you recommended him to me!
Regards,
AlbertAlbert
Good to see Steve is doing the right thing by you.
Remember you cannot put the offer in if you havent established the structure already.
Also the days of getting 70% of GR on vacant land have almost been and gone.
There are a couple of specialisied lenders we use who will do it but they will want to see someone with a bit of experience in such a development. For a first timer unless you have good income and asset backing there is no chance.Richard Taylor | Australia's leading private lender
Hi Richard,
Thanks for the heads up. Will keep your points in mind.
Regards,
Albert
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